UBS Securities LLC v. Prowse

Background

Vanessa Prowse worked for UBS AG Corporation in Australia before transferring to a position with UBS Securities LLC in New York. In connection with that transfer, she electronically signed an Employment Arbitration Agreement and Class, Collective and Representative Action Waivers. The agreement required arbitration of broad categories of employment-related claims, including statutory retaliation claims.

The agreement excluded claims for workers’ compensation benefits, but it expressly stated that retaliation claims arising out of or relating to workers’ compensation claims were not excluded. It also provided that arbitration involving a non-registered employee would proceed under the rules of the Judicial Arbitration and Mediation Services (JAMS). Prowse confirmed at oral argument that she was a non-registered employee for purposes of the agreement.

UBS terminated Prowse on August 6, 2019. On October 18, 2019, she filed a claim under Section 120 of the New York Workers’ Compensation Law before the Workers’ Compensation Board. She alleged discriminatory discharge in retaliation for previously filing a workers’ compensation claim and testifying before the Board. UBS asked her to withdraw the claim and then filed this case seeking to compel arbitration and obtain a preliminary injunction preventing her from proceeding before the Board.

The court had issued a temporary restraining order on January 10, 2020. That order excused UBS from appearing at a Board conference but allowed Prowse to appear and present the order to the Board.

Validity of the arbitration agreement

Applying New York contract law, the court found a valid and enforceable agreement. Prowse received an employment and transfer offer conditioned on signing the agreement, signed it on October 12, 2018, and began working for UBS in New York on November 5, 2018. The court held that her continued employment and the parties’ mutual obligations to arbitrate covered claims supplied sufficient consideration.

Prowse argued that the agreement was an unfair “take it or leave it” contract. The court rejected that argument, explaining that such an argument does not overcome clear contract language without a strong showing of unfairness, oppression, or unconscionability. The court also noted that Prowse was a lawyer licensed in Australia and registered in New York, and that she had not identified specific agreement language that was so unreasonable as to be unenforceable.

Scope and delegation of arbitrability

The court held that the agreement clearly delegated questions about arbitrability—the question whether a particular dispute must be arbitrated—to the arbitrator. The agreement incorporated JAMS employment arbitration rules, and those rules provide that the arbitrator decides disputes about the agreement’s formation, validity, interpretation, scope, and arbitrability. The court therefore held that the arbitrator should initially decide whether the Section 120 claim was arbitrable.

The court also independently concluded that the Section 120 claim fell within the agreement’s scope. The agreement covered claims relating to employment or termination, including statutory retaliation claims. Although it excluded claims for workers’ compensation benefits, it expressly preserved arbitration of retaliation claims arising from or relating to workers’ compensation claims. The court found no ambiguity in that language.

The court rejected Prowse’s argument that the provision allowing complaints to administrative agencies permitted her to pursue the claim before the Board. It distinguished between an agency acting as an independent prosecutor and an agency acting as an adjudicator. The court found that the Board would adjudicate Prowse’s claim, rather than independently prosecute UBS, so the agency-filing provision did not prevent arbitration.

Other objections

The court rejected Prowse’s argument that there had been no meeting of the minds because her subjective understanding of the agreement did not control the interpretation of an unambiguous written contract. It also rejected her argument that the agreement was ambiguous because of the word “benefits.”

The court further concluded that the cited New York cases did not establish that Section 120 claims could not be arbitrated. It held that Section 11 of the New York Workers’ Compensation Law did not apply because that provision concerns ordinary workers’ compensation benefits, not Section 120 retaliation claims. The court also held that the Federal Arbitration Act would preempt a state-law provision that purported to prevent arbitration.

The court found that requiring arbitration would not waive Prowse’s statutory rights because she could still pursue her Section 120 claim in arbitration. It also held that whether UBS’s conduct was retaliatory was a merits question for the arbitrator.

Ruling

The court granted UBS’s petition to compel arbitration and ordered Prowse to submit her Section 120 retaliation claim to arbitration under the procedures specified in the agreement. The court granted UBS’s motion for a preliminary injunction, barring Prowse from pursuing that claim before the Workers’ Compensation Board. The court explained that losing the benefit of an arbitration agreement constituted irreparable harm and that UBS had shown a likelihood of success on its request to have the dispute decided by the arbitrator.

The court denied Prowse’s motion for compensation as moot. It directed the Clerk to close all pending motions and the case.